| Catskill Mtn. Mech., LLC v Marshall & Sterling Upstate, Inc. |
| 2008 NY Slip Op 04257 [51 AD3d 1182] |
| May 8, 2008 |
| Appellate Division, Third Department |
| Catskill Mountain Mechanical, LLC, Respondent-Appellant, vMarshall and Sterling Upstate, Inc., Appellant-Respondent. |
—[*1] Freeman Howard, P.C., Hudson (Paul M. Freeman of counsel), forrespondent-appellant.
Stein, J. Appeals (1) from an order of the Supreme Court (Benza, J.), entered September 21,2004 in Albany County, which, among other things, denied defendant's motion for summaryjudgment dismissing the complaint, and (2) from an order of said court (McNamara, J.), enteredMarch 1, 2007, which denied plaintiff's motion to vacate a conditional order of preclusion and toreinstate the action to the trial calendar.
Plaintiff first obtained insurance from defendant, an insurance agency, in connection withplaintiff's business of sheet metal fabrication in 1994. From 1994 to 2001, plaintiff obtained andrenewed various insurance policies through defendant, including liability and workers'compensation insurance. In 1998, plaintiff was approached by another company about providinga service of "cleaning out" ships, a process in which cement is vacuumed out by stevedores,using a piece of heavy equipment called a Kovako, which is located on a floating barge. Plaintiffbegan performing this operation on a regular basis in the spring of 1999. Plaintiff's owner allegesthat he contacted defendant by telephone to request insurance coverage for the new operation and[*2]that defendant's agent almost immediately called him backand advised him that the necessary coverage had been obtained. Plaintiff's owner also alleges thathe had several subsequent conversations with defendant's agents, in which the specific nature ofplaintiff's new business was discussed in detail, although there are no allegations that thoseconversations concerned insurance coverage. Defendant's representatives dispute the allegedtelephone conversations and assert that they were unaware of the nature of the business.
In any event, after the alleged telephone calls, plaintiff received an endorsement to itsinsurance policy which contained only a longshoreman's clause for workers' compensationcoverage involving operations near water. The addition of the longshoreman's clause did notrequire any increase in the premium. Plaintiff's owner acknowledged that he received thatendorsement and failed to read it. He also acknowledged that he had received other policyrenewals, endorsements, certificates of insurance and insurance summaries which did not containany reference to cement unloading. In October 2000, the Kovako was damaged and plaintiffmade an insurance claim, which was denied on the basis of lack of coverage.
Plaintiff commenced this action against defendant for failure to provide sufficient liabilitycoverage. In May 2004, after the completion of discovery, including motions related thereto,defendant moved for summary judgment, and plaintiff cross-moved for summary judgment. InSeptember 2004, Supreme Court (Benza, J.) denied both motions on the basis that there werequestions of fact regarding whether plaintiff had the right to rely on defendant's "presumedobedience to his instructions," which would rebut the presumption that plaintiff knew thecontents of the insurance policy in effect at the time of the damage to the Kovako.
In March 2005, three days prior to trial, defendant made a motion in limine seeking topreclude plaintiff from offering evidence at trial concerning alleged conversations between theparties, based on a prior conditional order of preclusion. Plaintiff opposed the motion andcross-moved to vacate the conditional order of preclusion. Supreme Court (McNamara, J.)denied plaintiff's cross motion and, sua sponte, converted defendant's motion to one for summaryjudgment, orally granted the motion and dismissed the complaint on the basis that plaintiff couldnot make a prima facie case on liability or damages without the precluded evidence.
In March 2006, plaintiff moved for an order reinstating the action to the trial calendar andvacating the conditional order of preclusion. By order entered March 1, 2007, Supreme Courtdenied the motion. Plaintiff now appeals from that order, and defendant appeals from theSeptember 2004 order denying its summary judgment motion.
We find that Supreme Court (Benza, J.) erred in denying defendant's motion for summaryjudgment. "While insurance agents have a common-law duty to obtain requested coverage fortheir clients within a reasonable time or inform the client of the inability to do so, absent fraud orother wrongful conduct on the part of the insurance agent, an insured is conclusively presumed toknow the contents of an insurance policy concededly received, even though the insured did notread or review it" (Laconte v Bashwinger Ins. Agency, 305 AD2d 845, 846 [2003][internal quotation marks and citations omitted]). We have recognized exceptions to thispresumption only in limited circumstances, such as where the agent failed to correct a clearmisimpression created by the binder or policy (see Arthur Glick Truck Sales vSpadaccia-Ryan-Haas, Inc., 290 AD2d 780 [2002]) or where the agent made an affirmativemisrepresentation regarding coverage in response to questioning by the client after reviewing thepolicy (see Kyes v Northbrook Prop. & Cas. Ins. Co., 278 AD2d 736 [2000]).[*3]
Here, the alleged misrepresentation was made beforeplaintiff received the endorsement, plaintiff received but did not read the endorsement, theabsence of the desired coverage was readily apparent, and the circumstances (i.e., no increase inpremium) were such that a reasonable person would have questioned the agent further. Wedecline to create a further exception to the general rule under these circumstances. Therefore, asthere are no triable issues of fact, defendant is entitled to judgment as a matter of law. In light ofthis determination, plaintiff's appeal is rendered academic.
Cardona, P.J., Carpinello, Rose and Malone Jr., JJ., concur. Ordered that the order enteredSeptember 21, 2004 is modified, on the law, without costs, by reversing so much thereof asdenied defendant's motion; motion granted, summary judgment awarded to defendant andcomplaint dismissed; and, as so modified, affirmed. Ordered that the appeal from the orderentered March 1, 2007 is dismissed, as academic, without costs.